Business in Russia is poised to accelerate faster than the economies of the U.S., Japan, UK and Eurozone in 2014 and also in 2015, according to a just-released IHS analysis.
“We see a strong future potential for the Russian economy across defence, energy, chemicals, electronics and other industries – both at home and abroad, exploiting demand in Asia and EMEA. Chemicals and defence are examples of industries with hugely untapped export potential. The chemicals industry could double in a decade if given a $35 billion cash injection,” according to Steen Lomholt-Thomsen, IHS senior vice president, EMEA.
Economy – Russia’s Gross Domestic Product is forecast to grow by 2.6 percent in 2013, by 3.5 percent in 2014 and 3.8 percent in 2015. Russia’s economic growth is weakening in 2013 as investment activity and net exports disappoint, but IHS expects the pace of investment in fixed capital to regain momentum in 2014, partly as a result of public sector and public-private projects getting under way.
Defence – IHS expects Russia to overtake the UK and Japan in defence spending rankings, spending $68.8 billion in 2013. This will make Russia the world’s third largest spender on defence, behind the US (with a defence spend of $637.8 billion in 2013) and China (with a defence spend of $131.7 billion in 2013).
Chemicals – Russia’s chemical industry has the potential to more than double in size in a decade from 3 percent global share in 2013 to 7 percent by 2023. ISH says Russia, with 23 percent of the global gas reserves, is in an ideal position to follow the Middle East to become a petrochemical export powerhouse.
Electronics & Media – IHS foresees Russia becoming Europe’s fastest-growing TV advertising market in 2013, growing 9 percent to $5.16 billion. IHS indicates Russia is already Europe’s third largest TV advertising market, behind Germany and the UK. Main drivers are low advertising costs, a diversifying TV channel landscape and more reliable audience data.
Energy – Vast untapped oil and gas resources in the Arctic region, as well as substantial shale oil resources create potential for Russia to expand its position as a leading global oil and gas producer. Asia is considered an important growth market.
- Autos – The Russian light vehicle market is currently experiencing a difficult period. Sales fell 8.4 percent year on year in 2013 to the end of July, after more than three years of high growth. However, considerable growth potential remains in the light vehicle market. IHS predicts a 30 percent increase by 2020, saying that the Decree 166 Automotive Industry Policy may act as a catalyst to foreign manufactures operating in Russia, increasing manufacturing capacity faster than necessary.